Exchange Rate Is The Price Of A Nation 's Currency

The exchange rate is the price of one currency in terms of another. A fall in the value of the pound is known as a depreciation and affects both the level of aggregate demand and the costs of production for firms in the UK economy. //One way in which a fall in the exchange rate can be beneficial for the UK economy is that it “should

A stronger Korean won, remembering that Kia cars sold in the United States are paid for in dollars,

* Exchange rates may affect profitability on the business if they are sourcing materials (all the ingredients used to

One needs to have a base level understanding of what defines an exchange rate. According to Investopedia, a foreign exchange rate is “The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.”(Investopedia, 2012) The process by which foreign exchange rates are determined is really not any different than any other

When an input (machinery, components, capital, labor, etc.) is denominated in a foreign currency, the risk exists that an unfavorable exchange rate movement will increase the cost of doing business. When the products are priced and sold in a foreign currency, an adverse exchange rate movement will make the product appear more expensive to consumers, decreasing demand or forcing the company to reduce its own profit margin to maintain lower price levels. For companies with integrated international business systems, an exchange rate shock can literally force them out of business, with their operations experiencing pressures from both cost and profit centers.

Hint : When there is a change in the exchange rate, this would automatically alter the prices of all foreign goods to domestic goods, as the domestic prices are intertwined with the foreign prices. Thus, these changes would affect the trade flows between nations.

The exchange rate is the currency of a country expressed in terms of another currency, for example, US dollar or other nation’s currency compared to Canadian dollar. Canada has a flexible system when it comes to exchange rate system. Canada targets inflation to maintain the domestic value of the Canadian dollar. The exchange rate for the Canadian dollar against US dollar and other currency can be affected by supply and demand for Canadian dollar in foreign exchange market. Canada competes with many other countries for the share of US market, which is one of their top traders. However, many factors can affect the currency of the Canadian dollar with dominant role of different point in time. These factors include; the world prices for commodities.

The Exchange rate is the amount one country will buy another country’s currency. The conversion of currency is not 1 dollar for 1 dollar. The exchange rate between Australia and America is $0.7676 for 1 Australian dollar. Exchange rates can change from day to day. Back in 2011 the exchange rate between Australia and the USA was 1 Australian dollar would buy 1.015 US dollars. It was almost 1 for 1.

The depreciation of naira over the years has caused many firms especially the import dependent firms to suffer many loses as a result of exchange rate fluctuations. This has further led to difficulty in

Foreign exchange rates are best described as simply the price of a country’s money expressed in another country’s money. In simple words, it is the rate at which a currency can be swapped for another. An example of determining foreign exchange rates is by substituting goods for currencies. Another example is the yuan-dollar exchange will depend on how well the demand and supply moves. When the demand for dollars in China climbs and supply does not go up correspondingly, each dollar will cost more yuan to buy. (Colander, 2010)

Currency risks are majorly involved with expanding into foreign markets. Due to the fluctuations of exchange rates, apples profits can vary due to demand and supply. The value of a currency is varied due to currency depreciation and appreciation and this fluctuation and

Economic and the currency: first of all, every business is trying to avoid risk, therefor, the economic status of a foreign country is what the company looking for, they want the low unemployment rate, inflation rate and stable economic environment. Furthermore, the currency difference will change the product price strategy.

Exchange rates are very important policy that a government must decide on how to implement them. The exchange rate can effect on the economy and the actors who participant in them, thus each actor wants a policy that will benefit themselves. If a government is not too care, with could enter a currency crisis as witnessed in Mexico. To understand what exchange rate policy, the government should enact, it should understand how the actors’ attitudes. In this paper for instance, three different actors all responded differently to the question “How many problems do exchange rates cause for your business?” The results are, in a country that experienced appreciation tradable producers were much unhappier with the exchange rate than non-tradable producers, exporting firms were unhappier about the exchange rate if they were located in a country with a floating exchange rate compared to non-exporting firms, and lastly government owned firms were less likely to show unhappiness with exchange rate no matter their industry, export-status, or country. Economic actors will want the exchange rate regime to benefit them and make them prosper, thus they will support any policy that will favor their interest. In these cases, those policies are not appreciation for tradeable producers and not floating exchange rates for exporting firms. To understand why each actor reacted the way it did, theories about the exchange rate can be applied.

In the world, every country has its own level of production and consumption of goods and services called the economy. The economic activities allow each country to have its currency valued against other currencies and this is called exchange rate. When you borrow money, there is a charge that you pay in return on top of the borrowed amount called interest. Interest is usually calculated as per annum and it influences exchange rates.

Exchange rate represents the external value of a currency. Changes in exchange rates may affect the relative position of a country in the international trade. Politicians and economists concern about exchange rate variability for lots of reasons, among which that the exchange rate variability discourages trade comes first. However, a large empirical literature on this issue does not confirm a significant effect of exchange rate on the volume of trade [1]. Instead other variables such as employment should be much more important from a practical point of view, for it is closely related to people’s livelihood.